An Ohio toy company filed a complaint in Washington County Court Friday claiming it has suffered $1.1 million in damages due to problems related to the bankruptcy of Prime Plastics Inc. of Washington.
According to the complaint, Prime Plastics, of 100 Detroit Ave., manufactured finished products for Little Tikes Co. of Hudson, Ohio, and Prime possessed various plastic-injection molds and equipment belonging to Little Tikes. “The property is proprietary in nature and cannot legally benefit anyone other than” Little Tikes, the toy company asserted. In Chapter 11 bankruptcy, according to the U.S. Courts website, the debtor typically proposes a plan of reorganization to keep its business alive and pay creditors over time.
In Novemeber 2012, Prime Plastics and Little Tikes entered into a reimbursement agreement, and the local manufacturer filed the voluntary Chapter 11 bankruptcy petition in Pittsburgh last February.
Prime Plastics continued working under the reimbursement agreement, but in September, Little Tikes demanded that its property be returned. Little Tikes maintains in its Washington County Court documents that Robert S. Bernstein, Chapter 11 trustee of the Prime Plastics bankruptcy estate since Oct. 23, has refused to return the property.
Without access to its equipment, Little Tikes claims it is losing market share that cannot be recovered and cannot be “adequately compensated by money damages alone.”
In the complaint filed in Washington County Court, the attorney for Little Tikes states the value of its property is $10,000.
In a Dec. 16 order, U.S. Bankruptcy Court Judge Thomas P. Agresti wrote of convening a hearing Oct. 17. “As the first item on the agenda at that hearing, the Court announced that it had decided to order the appointment of a Chapter 11 trustee due to the gross mismanagement of the debtor by Jacqueline Meyers and the involvement of George Retos in the management of the debtor. … The Court stated that it certainly appeared that ownership of the molds was not disputed, as (Little Tikes) claimed,” but that the request would not be granted at that time to allow time for a trustee to be appointed and to make his or her own determination whether to oppose the motion.
State records at the time of the bankruptcy filing listed Meyers as chairwoman of the plastics company and Retos as the president and treasurer. Retos has a history of income tax problems and relinquished his license to practice law decades ago. The Internal Revenue Service and FBI searched his East Washington home and Prime Plastics in June but would not disclose the nature of their investigation.
Bernstein, after his Oct. 23 appointment, raised the argument that he had a “statutory possessory lien” on the Little Tikes molds under Pennsylvania law.
“You want to battle that in state court, is that what you’re saying?” a transcript of a Nov. 19 bankruptcy court proceeding quotes Agresti as saying.
Bernstein answered that was exactly what he intended to do.
Agresti wrote that he would allow Little Tikes to decide in which court it would pursue the matter, and he ordered Prime Plastics to protect Little Tikes’ property by maintaining insurance coverage and making sure it was not sold pending resolution of the dispute with Little Tikes over possession.